Successfully reported this slideshow.
Department of Community Medicine
PCMS & RC ,Bhanpur
4.Application to health sector.
5.Main features of OR.
6.Phases of OR study.
7.Major tools & techniques of OR .
8.Scope of OR practices in health management .
9.Selected techniques of OR with application in
11.Individual explanation of each
Many management techniques &
methods have been developed in the
last few decades in business
activities .These methods have been
adopted in public administration also &
are finding numerous application in the
Methods such as personnel selection
,training & retraining ,motivational
methods ,development of communication
channels & skills , utilization of knowledge
of group dynamics ,leadership
development , supervision ,team building &
conflict resolution , morale promotion etc
.are all different methods designed to
develop better management & enable
organizations to be efficient & effective.
Organization & Methods (O&M) is the
well known analytical approach aimed
at operational improvement
.Sociology ,psychology ,social
psychology ,educational technology
,economics & statistics have all
contributed to the development of
In addition to these traditional methods
, new management techniques have
emerged in the last few decades ,
especially since World war II .Increased
use of mathematical & statistical
concepts & methods thus emerged .
These quantitative & semi quantitative
methods have been fruitfully employed in
business , defense & industry.
The methods used may initially be less
exact as the sophisticated quantitative
techniques in common usage may not be
immediately applicable in the health field.
Such applications have already proved
useful in increasing the efficiency by cost
reduction as well as ensuring better health
The discipline concerned with the application of
quantitative mathematical methods & logic to find
solutions to managerial problems – the operations
Research – in the health field has developed
The techniques of Operational Research have been
applied and proven in many industries under
For instance :-
- ‘Lean’ in manufacturing.
- ‘Supply Chain’ in logistics and
- ‘Yield Management’ in airlines.
Operational Research has been studied in Health
An Operation can be defined as a set of
interdependent or interacting activities that
are necessary for the occurance of a
desired outcome.; both activities & outcome
can be treated as defined variables in this
set of activities .
Operations Research (OR) is meant any
formalized quantitative analysis whose
purpose is to improve efficiency in a
situation where ‘efficiency’ is clearly
“Operational Research is the
scientific study of operations for the
purpose of making better decisions.”
“The use of systematic research
techniques for program decision
making to achieve a specific
outcome.”(Definition by WHO ,2003)
The OR methods are useful to know how to
conduct & co-ordinate the various activities
& operations within an organization ,
whether for production of goods or for
The intent of OR is to learn about
management, administrative, cultural,
social, behavioral, economic and other
factors that either exist as bottlenecks to
effective implementation or could be tested
to drive insights into new, more effective
approaches to programming.
The application of OR methods show that
many of the commonly occurring problems
have similarities so that there are certain
common types of solutions to various
problems.The formulation of models &
obtaining solutions to get optimal results is
thus greatly facilitated because of
The approach is to make use of available
scientific techniques to problems involving
the operations of the system so as to
provide optimum solution to the problems.
A mathematical model is constructed which
is a depiction of the interrelationships in
mathematical terms of the the actual
system under study.Some of the variables in
such a model can be controlled & are
amenable to manipulations , while some are
constants or variables not amenable to
changes but affect the outcome of the
health sector :
Simple methods like the time trends &
statistical forecasting have been in use
for quite some time .Work (activity)
sampling & analysis ,time motion
studies,equipment utilization studies
etc. are also in use .
OR methods have been applied to find
solution to problems like determination of
need of maternity beds on the basis of
Poisson distribution of admissions & no. of
deliveries ,for improved bed allocation &
utilization ,improved health care & hospital
services ,control of TB etc.
Techniques have also been developed for
planning & implementation of complex
projects in a co-ordinated manner to ensure
efficiency by reducing delays as well as
cost . Several of these techniques of project
management have shown their usefulness in
completion of health care like
establishment of hospitals.
Main features of
Operational Research :
1.OR is the inter disciplinary team approach to
find out optimum result (return).
2.OR uses tools & techniques of scientific
research/methods to arrive at the optimum
3.OR tries to optimize the total output by either
maximizing profit/revenues or minimizing the
4.OR emphasises an over all approach to
systems i.e,total system approach.
5.OR provides BAD answer to the problem
where worse could be given i.e, it cannot
provide always perfect solution to the
problems. Thus , OR believes in improving the
quality of the solution.
Phases of the
1.Defining/Formulation of the problem –
a)Description of the goal/objective of the
b)An identification of the decision
alternatives of the system.
c)Recognition of the limitations ,restrictions
& requirements of the system.
2.Model construction – a)Make most suitable model
for representing the system.
b)Model should specify quantitative expressions for
the objectives & the constraints of the problem in
terms of its decision variable.
c) Model should fit into one of the common
mathematical models like transportation or
queueing model etc to obtain a convenient
d) A simulation model is adopted if mathematical
relationships are too complex.
e) Some cases may require the use of combination
of mathematical ,simulation & heuristic models.
3.Solution of the model - In mathematical models ,
this is achieved by using well defined Optimisation
technique.Model thus yield an optimum
solution.Additional information concerning the
behavior of the solution due to changes in the
systems parameters should be secured. This is
usually referred to as sensitivity analysis.
4.The fourth phase calls for checking model
validity. A model is valid if despite its inexactness
in representing the system,it can give a reasonable
prediction of the system’s performance.A common
method for testing the validity of a model is to
compare its performance with some past data
available for the actual system.
5.The fifth & the final phase of the
study deals with the implementation of
the tested results of the model .It is
imperative that the implementation
phase be executed through the
cooperation of both the OR team &
those who will be responsible for
managing & operating the system.
a.Time trends & forecasting
b.Decision theory & tree
c.Time motion studies
d. Work sampling & activity analysis
e. Queuing theory
f.Gantt chart & work schedule
k.Precedence & arrow diagramming
m.PERT & PEP
p.Cost accounting & analysis
r.Cost benefit analysis
s.Cost effectiveness analysis
v.Zero base budgeting
x.Input output analysis
a1.Management objectives & appraisal by
b1.Management by exceptions
d1.Current state assessment
f1.Log frame analysis.
Time Trends & Forecasting :
Simple statistical method commonly used in
epidemiology.Based on past experience
,predictions can be made about the expected
occurance ,by using mathematical methods.Such
projections are similarly made by demographers
with reference to population.
In case of endemic diseases,epidemiologist can
construct endemic curves based on incidence of a
disease & smoothen out the same by mathematical
techniques & so establish the likely limits of
Forecasting the demand for supplies of materials
like vaccines , drugs etc.can also be similarly
anticipated & a state of preparedness maintained.
Decision Theory& Decision Tree :
Decision theory is the body of analytical
tools,including logic & mathematical models,using
probability theory & diagrammatic presentation for
use in decision making.
Decision tree is a diagram that depicts key
interactions among decisions & associated chance
events,as the decision maker understands them.
The branches of the tree represent either the
decisions or the chance events.The base of the
decision tree ,which may be drawn horizontally ,is
the starting point denoting an event which occurs
A set of relative values for the predicted outcome
of each possible decision can be arrived at from the
possibility of occurance.
All possible outcomes are valued.The highest value
indicates the course most likely to produce the
greatest benefit .The most rational decision then
can be taken in terms of resource & the
effectiveness.The use of method presupposes the
effect that different decisions are likely to produce
or else assumptions have to be made.Even if these
data are not precisely known,the method is useful
in a way.
It enables the formulation of a process that is
rational,comprehensible,flexible & capable of
showing the effect of variations in these
In recent years the method has enabled policy
makers to study alternative health strategies
logically in disease screening,immunization etc.
Time Motion Studies :
It is a simple technique of industrial engineering.
Stopwatches are used for observing & timing the
physical work & movements carried out by a
A series of related tasks is similarly studied for
suggesting modifications to obtain maximum
efficiency.Modification brings substantial reduction
of physical efforts & being time saving.
So this method is a useful analytical tool for
increasing productivity.Many tasks carried out by
hospital nurses can be pooled so that their physical
movement from place to place can be minimised .
Work Sampling & Activity Analysis :
It is a method of sampling used to estimate the
utilization of equipment ,machines vehicles etc.
It also includes the observation of workers to study
the activities ,which are carried out by them during
the course of their work.
A large number of observations spread out over
various parts of working time & for adequate time
is required to get a valid estimate.Such analysis
thus enables not only a scrutiny of activities
undertaken but also suggest possible
The utilization of expensive equipment can also be
improved & idle time reduced using the technique.
Queuing Theory :
In a factory when a series of processes is to be
carried out sequentially the job has to move from
one place to another in a given sequence.
The time required for the processes to be carried
out at different places may vary. At some places
,more than one job may be handled simultaneously.
The jobs thus may join the “QUEUE” waiting their
turn to be processed at different rates at different
An economic balance has to be developed between
the cost of providing processing facility & the cost
associated with job having to wait for that process.
GANTT chart –Work
Scheduling :It is a useful technique especially where production
deadlines are to be met & a watch is to be kept on
attainment of tasks on time.It is used to assist
controlling the quantity of work in relation to
time.It is used in planning,coordinating &
monitoring progress of an activity that involves
several parallel sub activities.
Time flow is indicated on the top of the chart
.Below this ,horizontal lines are used to show
different subactivities.The left end of the lines
shows the initiation of activity & the length of each
line is proportional to the period taken as indicated
at the top.A heavy vertical line portrays the current
date & keeps on moving to the right day by day.
A look at the chart quickly shows the progress on
any date in comparison with what was to be
achieved accord. to plan.
Simulation Model/Study :
This model is a symbolic representation of an
The impact of the changes on the total output can
thus be estimated.
The method has found application in health field
,e.g control of communicable diseases ,population
control etc.The simulation study method has been
used for planning & evaluation of immunization
&sanitization programmes for control of typhoid
fever & other bacterial diseases.
The limitation of such a study are that assumptions
are made about specific condition of the
community being stable.Readjustments are
necessary if conditions change.
Systems Analysis :
This approach recognizes the existence of
A system can be defined as an arrangement
& set of relationships among multiple parts
functioning as a whole.
The approach using system analysis is being
increasingly used for decision making in
public administration , following the proven
benefit in decision making related to
complex defense problems.
It has applications in health sector reforms
and area development projects.
The system analysis helps health planning
at different levels to be perceived as a set
of interrelated steps in the policy –
Health interacts with other components of
social system & has multifactorial
etiology.Individual& community health
depends on many factors.It is the result of
events & activities in many different
components of the social system.
Thus these activities must be carefully
considered in a total assessment for their
additive,synergistic Or detrimental effect on
Linear Programming :
It is a special case of mathematical programming in
which the relevant components of the system are
shown by linear functions.
The measure of function is a linear equation & the
restrictions on resources are also expressed as
linear equation or in equations.It is a useful tool for
deciding the course of action for a problem in
which there are competing alternative uses for
This method is prescriptive i.e an optimum solution
is suggested subjected to various financial,human
or biological constraints.Thus this technique
enables the facts & desired choices to be combined
in a single,easy to comprehend result.
Inventory Control :
Application of quantitative methods for
reduction of expenditure on maintaining a
stock of different items & supplies required
in a health institution or a hospital proves
The obvious solution to avoid “out of stock”
position will be to keep a large stock of all
items available all the time.However ,this
solution is associated with the high cost of
carrying the inventory.
This cost includes the cost of money locked up
in the items purchased & lying idle till they are
used,the cost of storage,insurance,risk of
pilferage,deterioration due to bad keeping
These cost are usually substantial.Placing
orders very frequently to maintain adequate
stock is also associated with the cost of
processing the order in terms of administrative
effort ,receiving,inspecting & handling the
So to get over the problem , quantitative
Precedence & Arrow Diagramming
PDM - This consists of constructing a project
network diagram using boxes or rectangles
called nodes to represent the activity.These
are connected with arrows ,which show the
dependencies.This is also known as activity on
node.The dependencies of various types…….
1.Finish to start
2.Finish to finish
3.Start to start
4.Start to finish
ADM – This consists of constructing a project
network diagramme using arrows to represent
the activities & connecting them at nodes to
show the dependencies.Dummy activity is
sometimes shown.A dummy is technically not
an activity but a way of representing a
dependency between nodes.The method is also
called as activity on arrow.The method is less
commonly used than PDM.
Network Analysis :
Co-ordination is one of the basic requirement of
management. Planning & monitoring the
progress of a large no. of different interrelated
activities necessary for the completion of a
project with minimum time & minimum cost
Corrective actions can be taken in time if
delays ,which are likely to upset the various
schedules , are detected.
The activity list is comprehensive list,including
all the activities to be performed on a project .
Activity sequencing involves identifying &
documenting the logical relationships among
These can be logically sequenced with project
precedence relationships.The basic principle of
Network analysis is a simple one.
It is to show diagrammatically the logical
sequence in which different events necessary
between the start & the end of a project need
to take place .
The time required for accomplishment of different
tasks can also be considered in Network
analysis.When the element of time is
introduced,this management technique becomes
more powerful.Advantages of Network Analysis –
1.Widely known & Popular
2.Simple to understand
3.Well described in practical terms
4.Applies to any project where activities can be
6.Highly qualified specialists are not required.
7.Used in Health Service Application with
Review Technique (PERT) &
Both techniques are post war innovations.Since
then the technique has been used in a number
of non repetitive one time projects of a
complex nature without precedence.
PERT TECHNIQUE :
1.Identification of various events necessary in the
final achievement of an objective.
2.A directed network of flow diagram consisting of
events shown by circles/squares in their logical
3.Activities which are time consuming elements of
the project are shown as arrows to connect these
4.Some events depend upon achievement of one
single prior event while some other require the
completion at two or more prior events.
5.An estimate of the time requirement of the
different activities is made using a special
method,which gives a 50% probability of correct
estimate of the time .
Critical Path Method (CPM) :
The primary objective from the beginning was the
reduction of costs.The technique generally involves
complex projects but with prior experience.
CPM technique :
1.The points in CPM technique/network represent
activities rather than events as done in PERT
2.It is made of activities that cannot be delayed
without delaying the completion of the project.
3.A float or slack is simply how much time an
activity can slip before it’s path changes to critical
4.The focus of CPM is on calculating float ,in order
to determine which activity have the least
5. The path ,which takes the longest time for
completion between the beginning of the project &
the completion , is the critical path.
6.In CPM ,time required for completion of the
project is not only known but the presumption is
that it can be controlled ,if necessary ,by provision
of additional inputs.
7.By allocation of more resources withdrawn from
non critical activities ,the time taken for a
particular activity can be shortened .
S.No PERT CPM
1. Network design is
based on events
Based on activities
2. Time requirements
Time requirements are
to be known by past
experiences in CPM
3. Shortest possible
time requirement at
any cost is the
Here optimum mix of
time & cost is vital in
CPM to achieve
Monitoring Expenditure :
A visual presentation (tabular display or graph)
showing the sanctioned grants & monthly
expenditure & progressive total is useful in
Separate information may be necessary if the
grants are distributed to various subordinate
officers,departments or divisions .Timely action can
then be taken to effect expenditure by following the
procedure laid down.
The non utilization of grants during the financial
year & the rush to utilize them in March before the
financial year closes attracts criticism repeatedly.
Cost Accounting & Cost Analysis :
The use of such techniques has provided a tool for
measurement of the cost of health services.
It has helped in creating an awareness of use of
objective criteria & yardsticks for measurement of
It enables a comparison to be made between the
cost of similar & comparable services provided at
different health centres & hospitals thus helping to
pinpoint those which are not being rendered
This is the first step in further study to know the
cost structure ,components of unit cost & the
reason for costliness.
Then suitable steps can be taken to bring about
the economy.When expenditure incurred by
various hospitals is compared it is found that
there is a lot of variation in unit cost of similar
types of treatment & services.
Such in depth studies may reveal that a lot of
time is spent on unproductive activities.
Cost accounting is thus a valuable
management tool to identify inefficient
services ,locate wasteful use of resources,take
corrective action & bring efficiency into the
health care system.
Disability Adjusted Life Year :
Health economists & World bank developed
DALY as a statistical measurement for the
value of lives lived with disability.The
primary focus of DALY is to measure the
impact of diseases in terms of years of
burden & loss.The DALYs calculate the
present value of future years of life lost for
individuals who either die or become
Cost Benefit Analysis :
In the process of allocation of resources for
health sector in developmental planning ,
the benefits ,which are expected to
result,should be estimated.If resources are
to be allocated for health programmes ,their
non availability for other prog. must be
taken into account.
“Opportunity cost” is the term used to
describe the loss to the community of
failure to use the available resources
,technology or institution in the best
Benefits arising out of health prog. are the
desired effects of the prog. Like the reduction
in mortality ,morbidity & control or eradication
of a disease.
A cost benefit analysis of preventive services
of the intensified campaign against small pox
in India during the period july 1973 to Dec.1975
has been shown to give a net benefit of about
Rs.1058 million & eradication of smallpox in
yearly saving of about Rs.728 million.
Cost Effectiveness Analysis :
This approach is similar to the cost benefit
In this method an attempt is made to compare
the effectiveness however measured & the
necessary cost associated with it of two or
more alternative future resource commitments.
This type of analysis helps to identify the most
efficient means of satisfying a certain
Performance Budgeting :
Performance budgeting is the system of formulation
of expenditure in public administration with
reference to functions , programmes , activities &
Various components involved are :
1.Stipulation of objectives
2.Classification of progs. & activities
3.Establishment of standard & norms
6.Review of performance ,reporting & information
Zero base budgeting :
Zero base budgeting is defined as an
operating ,planning & budgeting process
which requires each officer to justify his
budget demand from zero level upwards.
The onus of proving necessity of funds with
acceptable justification thus lies with the
officer who submits the demands.
Starting from a zero base of no funds for the
prog. the sanctioning of every rupee needs
justification even for ongoing prog.
Input –Output Analysis :
It is a descriptive method . Health
consumes resources (inputs) in the form of
staff , equipment etc.& produces outputs
like treatment given ,deliveries conducted ,
immunization performed etc. An input
output table can be constructed to show
how much of each input is needed to
produce a unit amount of each output.
Outcome Budgeting :
The budget ,which is presented & eventually
approved by the Parliament ,proposes
financial outlays for different activities to be
carried out in the subsequent financial year.
In due course ,the amounts actually spent
out of the sanctioned ones are accounted
for & audited.
The government doesnot present the
achievements arising from the expenditure.
Efficient conversion of outlays into
outcomes would ,therefore,require making
the delivery system effective with
appropriate structures &
management system,increasing use of
information technology & involvement of all
the ministries in critical decision making &
Starting with plan expenditure ,non plan
expenditure will also be covered eventually.
Management by Objectives and
Appraisal by Results :Appraisal of performance by the results
achieved is only one component of the total
Management by objectives has been defined
as a system wherein the superior & the
subordinate managers of the organization
jointly define its common goals,define each
individual’s major areas of responsibility in
terms of the results expected of him & use
these measures as guides for operating the
unit & assessing the contribution of each of
So MBO can help management to provide
beneficial results by wise
adaption.Maximum return can be obtained
with a minimum of managerial attention due
to this selective approach.
Management by Exception :
In the technique of ‘Management by
exception’ managerial attention should be
focused on activities ,which are deviating
from the normal,desired or excepted course
beyond permissible limits of tolerance.
This process will be facilitated by exception
oriented management information
system.Targets & quantitative measures of
assessment will have to be built into the
The limits of tolerance for deviant
performance will have to be established
carefully ‘to ring the bell’ for managerial
attention & decision making.Thus
management by exception helps to identify
& attend to
etc. which are not giving expected results.
Situational Analysis :
It is an integral component of the
management process to find out what the
existing situation is,analyse the
same,identify ,which aspect need
changing,and then plan accordingly.This
exercise has been to be carried out in
routine practice .whether planning at the
National level or at the the micro level.
Current State Analysis :
The first & foremost important basic
objective of CSA is to assess your current
institutional performance against ideal
future vision in many different ways.
Gaps will be found between these two.Then
action points are to be developed for the
progress in a realistic,comprehensive
While developing these the internal & the
external environmental factors are to be
SWOT Analysis :
For bringing about an improvement of the
performance of an organization ,strategic
planning has to be carried out.Basic step for
this is CSA.
SWOT analysis helps in this process.Another
use of the analysis is to compare two
institutes which may be competitors.
The analysis involves taking into
consideration factors internal to the
institution,like human resources ,their level
of dedication ,motivation training
etc.,Availability of material & financial
resources,partnership & alliances with other
institution ,public image etc.External
factors include the social or cultural
environment of operation ,attitudes towards
Logical Framework:Also known as Log frame.This method is
found useful for bringing out clarity in the
process of planning & evaluation.It has the
advantage that it compresses the entire
prog. being proposed in a summary format.
The process becomes “rational ,
,logical.The Log Frame consists of matrix
with 16 cells . The vertical columns mention
Goal , purpose , outputs & the activity
Other cells they mention the objectively
verifiable indicators.It is a very exacting
process & should be carried out as a
participatory exercise by the team,which is
International Federation of Operational
IFORS is an umbrella organization for
Operational Research societies world-
It represents 50 national societies
including those in US, UK , France ,
Germany, Canada , Australia , New
Zealand, Philippines , India , Japan and
Operational Research Society of
Founded in 1957.
The society is affiliated to the IFORS.
Head quarter of ORSI is located in
The society publishes a quarterly journal
Institute for Operations Research and the
INFORMS started an initiative to
market the Operations Research
website : ” The Science of
This initiative has been adopted by
Operational Research Society in UK.
INFORMS publishes twelve Scholarly
about Operational Research.
2.Information System Research.
3.INFORMS journal on computing.
4.Interfaces: An International Journal of the
Institute for Operations Research and the
5.Management Science: A Journal of the
Institute for Operations Research.
Center for Operations Research
CORT established in 1991 is one of the
leading research and training
organization in India.
Its headquarter is in Varodara ,Gujarat.
Broadly it covers area of health ,
demography and social and
CORT is responsible for running State
Training and Resource Center (STRC) in
the state of Gujarat.
CORT is actively involved in building
research capacity of NGOs by organizing